IMF predicts slow global recovery from financial crisis

IMF Chief Economist Olivier Blanchard says the world is absorbing an enormous shock from the financial crisis and recession that began in the United States in 2007. Blanchard presents an economic outlook sharply reduced from the predictions of only three months ago, Voice of America reports.

The IMF says the world economy will shrink by 1.3 percent this year, its worst performance in more than 60 years. It says recovery is expected to begin only at the end of the year and that growth will recover to only 1.9 percent in 2010. Blanchard says there has been unprecedented contraction in recent months.

«The collapse of demand has led to sharp cutbacks in production and a dramatic decline in exports. Global GDP went down by an unprecedented six percent, at an annual rate, in the last quarter of 2008. And, as far as we can tell, most likely declined almost as fast in the first quarter of 2009,» he said.

The severity of the global downturn has surprised IMF forecasters who only three months ago predicted slight growth, not a downturn, for 2009. Blanchard expects the recovery to be sluggish with unemployment in the major economies peaking only at the end of 2010.